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LINDE PLC (LIN)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered resilient execution in a muted industrial economy: sales $8.50B (+3% YoY), adjusted EPS $4.09 (+6% YoY), and record adjusted operating margin 30.1% (+80 bps YoY) .
  • Consensus beat: EPS $4.09 vs $4.04; revenue $8.50B vs $8.38B; 19 EPS and 15 revenue estimates. Bold beat on both lines, aided by price discipline, productivity, and modest FX tailwind in the quarter *.
  • Guidance: Q3 adjusted EPS $4.10–$4.20 (up 4–7% YoY, assumes ~1% FX tailwind); FY25 adjusted EPS raised at the low end to $16.30–$16.50 (up 5–6% YoY; ~1% FX tailwind) — cautious macro embedded despite improved FX .
  • Strategic backlog momentum and capital deployment: sale-of-gas backlog at $7.1B; continued wins in electronics and clean energy; major U.S. space sector investments; commissioning of world-scale helium storage cavern — all supportive of multi‑year growth .
  • Stock reaction catalyst: broad-based margin expansion and clean energy/electronics project pipeline (plus helium infrastructure) sustain quality growth despite base-volume headwinds; near-term narrative hinges on FX, Europe softness, and electronics materials destocking normalization .

What Went Well and What Went Wrong

What Went Well

  • Record profitability: adjusted OP margin reached 30.1% (+80 bps YoY) and adjusted EPS hit $4.09 (+6% YoY), with operating cash flow up 15% YoY to $2.21B .
  • Backlog and strategic wins: sale‑of‑gas backlog $7.1B; new U.S. Gulf Coast low‑carbon ammonia supply agreement; electronics pipeline remains robust. CEO: “The current $7.1 billion sale‑of‑gas backlog will ensure attractive growth for years to come” .
  • EMEA margin strength despite volume declines: OP margin 36.1% (+240 bps YoY) via pricing and productivity; CFO highlighted strong contracts and FX tailwind aiding double-digit OP growth in Europe .

What Went Wrong

  • Base volumes −2% YoY (overall volumes −1% YoY), particularly in EMEA manufacturing/chemicals; management guides conservatively for continued macro softness and contracting assumptions at the top end .
  • Electronics “Global Other” advanced materials destocking weighed on end-market slide despite gases sales growth; management expects normalization in H2 .
  • Americas margins flat YoY (31.7%) amid business mix (including home care) despite price and volume positives; management expects improvement but cautioned quarterly noise .

Financial Results

Consolidated P&L vs prior periods and estimates

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Billions)$8.28 $8.11 $8.50
GAAP Diluted EPS ($)$3.60 $3.51 $3.73
Adjusted EPS ($)$3.97 $3.95 $4.09
Operating Profit Margin (%)27.4% 26.9% 27.7%
Adjusted Operating Margin (%)29.9% 30.1% 30.1%
Operating Cash Flow ($USD Billions)$2.81 $2.16 $2.21
Estimates vs Actual (Q2 2025)ConsensusActual
EPS ($)4.04*4.09
Revenue ($USD Billions)8.38*8.50
# of Estimates (EPS / Rev)19* / 15*—

Values retrieved from S&P Global.*

Segment Breakdown (Q2 2025)

SegmentSales ($USD Billions)YoYUnderlying SalesPriceVolumeOperating Profit ($USD Millions)OP Margin (%)YoY bps
Americas$3.81 +4% +4% +3% +1% $1,209 31.7% Flat
APAC$1.66 Flat −1% Stable −1% $490 29.6% +100
EMEA$2.16 +3% −1% +3% −4% $780 36.1% +240
Linde Engineering$0.55 +1% N/AN/AN/A$90 16.3% N/A
3rd-Party Equipment Backlog$3.2 ———————

KPIs and Capital Allocation (Q2 2025)

KPIQ2 2025
Operating Cash Flow ($USD Billions)$2.21
Capital Expenditures ($USD Billions)$1.26
Free Cash Flow ($USD Billions)$0.95
Capital Returned to Shareholders (Divs + Buybacks, $USD Billions)$1.81
Sale-of-Gas Project Backlog ($USD Billions)$7.1
Return on Capital (%)25.1%
Dividend per Share (Declared)$1.50 (Q3 2025)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EPSQ3 2025N/A (Q1 call did not provide Q3)$4.10–$4.20; +4–7% YoY; ~1% FX tailwind New issued
Adjusted EPSFY 2025$16.20–$16.50 (assumed ~2% FX headwind) $16.30–$16.50; +5–6% YoY; ~1% FX tailwind Raised low end; FX moved from headwind to tailwind
CapexFY 2025$5.0–$5.5B $5.0–$5.5B Maintained
DividendQ3 2025$1.50 (Q2 declaration) $1.50 (Q3 declaration) Maintained

Note: Management frames FY and Q3 ranges conservatively, offsetting better FX with weaker macro assumptions .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024)Previous Mentions (Q1 2025)Current Period (Q2 2025)Trend
Profitability and MarginsQ4 adj OP margin 29.9%; EPS $3.97 Q1 adj OP margin 30.1%; EPS $3.95; pricing/productivity driving expansion Record adj OP margin 30.1%; adj EPS $4.09; OCF +15% YoY Improving
Macro and VolumesUnderlying sales +2%; stable volumes Base volumes −2%; cautious macro; pricing to inflation Volumes −1% YoY; base −2%; conservative guide assumes contraction Worsening/sluggish
EuropeEMEA margin 33.3%; volumes −2% Bearish near term; pragmatic decarbonization talk Continued softness; strong OP growth via FX/pricing/productivity Mix: macro soft, margins strong
ElectronicsProject start-ups supported APAC New Samsung win; backlog pipeline healthy Gases sales up; advanced materials destock weighed; normalize in H2 Mixed near term; positive pipeline
Clean EnergyLargest product supply deal supports $10B backlog $8–10B clean energy over few years; focus on blue H2, 45Q New low‑carbon ammonia win; backlog $7.1B; 45Q support reiterated Steady execution
Helium—Helium & rare gas pricing weaker in APAC Helium volumes flat, pricing down HSD; cavern commissioned to optimize sourcing Improving supply reliability
Space——Major U.S. investments in FL/TX; commercial space revenue quadrupled over ~3 years Structural growth

Management Commentary

  • “EPS of $4.09 and operating margin of 30.1% both represent all-time quarterly highs… Operating cash flows grew 15%, and ROC of 25.1% continues to comfortably lead the industry.” — CEO, Sanjiv Lamba .
  • “In a little over four years, the sale of gas backlog has approximately doubled from $3.6 billion to $7.1 billion… almost three-quarters are in the Americas… electronics and clean energy end markets.” — CEO .
  • “Operating profit of $2.6 billion increased 6% over prior year… Operating margin of 30.1% increased 80 bps… EPS of $4.09 also increased 6%… despite base volume headwinds.” — CFO, Matt White .
  • “For the third quarter… $4.10–$4.20… includes an assumed 1% currency tailwind… we offset that with a more negative assumption of the economy.” — CFO .
  • “Helium volumes are flat; pricing down high single digit… commissioning of a ~3 billion cubic feet cavern strengthens sourcing flexibility.” — CEO .

Q&A Highlights

  • Geographic outlook: Americas flattish with resilient end‑markets; Europe remains weak with negative volumes; APAC balanced (India a bright spot; China mixed) .
  • Pricing discipline: Track globally weighted CPI; exception in China due to helium/rare gases; pricing expected to remain positive across geographies .
  • Margin dynamics: Americas margin noise tied to mix (home care); expectation remains for 30–50 bps expansion across segments; EMEA OP growth supported by FX, pricing, productivity despite onsite volume effects .
  • Guidance construction: Top end assumes ~2% base-volume contraction; FX tailwind (~1%) offset by macro caution; algorithm intact with management actions and capital allocation .
  • U.S. policy/tax: “One Big Beautiful Bill Act” permanence and bonus depreciation reinstatement viewed net positive for cash taxes and project IRRs (~100 bps average improvement) .
  • Electronics detail: Gases to electronics grew YoY/sequentially; advanced materials destocking drove reported end-market decline; normalization expected in H2 .
  • Space growth: Commercial space revenues ~4x over ~3 years; ~$1B cumulative infrastructure planned; supporting >4 out of 5 U.S. launches .

Estimates Context

  • Q2 2025 beat vs S&P Global consensus: EPS $4.09 vs $4.04; revenue $8.50B vs $8.38B; 19 EPS and 15 revenue estimates. Expect modest upward revisions to Q3/FY EPS where models had assumed stronger macro headwinds and less FX tailwind *.
  • Guidance implies conservative macro with maintained margin discipline; estimate changes likely to reflect 1) FX transition from headwind to tailwind, 2) continued price/productivity spread, and 3) H2 normalization in advanced materials offsetting EMEA weakness .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Quality beat: both EPS and revenue ahead of consensus with record adjusted margin — pricing and productivity continue to offset base-volume weakness *.
  • Near-term setup: Q3 guide is cautious (macro contraction assumption) despite FX tailwind; upside if volumes stabilize and FX remains supportive .
  • Europe: Expect continued volume pressure, but margins protected via contracts and pricing; story remains about disciplined execution rather than cyclical recovery .
  • Structural growth drivers: Backlog ($7.1B) tilted to Americas; electronics and clean energy wins plus U.S. tax policy support project IRRs and multi‑year EPS algorithm .
  • Helium positioning: Cavern commissioning enhances supply reliability and sourcing economics, mitigating pricing volatility impacts in APAC electronics .
  • Space sector optionality: Significant U.S. capacity additions (FL/TX) and rising commercial launch activity offer a durable, differentiated growth vector .
  • Actionable: Favor on pullbacks tied to macro headlines; monitor FX, EMEA volume trajectory, electronics materials normalization, and Q3 delivery vs conservative guidance for potential estimate revisions .
All adjusted figures are non-GAAP as defined by Linde, with reconciliations referenced in the company’s materials.

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